WIAA Objects to In-House Producer Disciplinary Hearings in California

The Western Insurance Agents Association is throwing up some objections to a California Department of Insurance proposal that would enable the department’s hearing bureau to adjudicate agent/broker and carrier disciplinary proceedings.

Producer disciplinary proceedings in California have been held for more than 50 years in the state Office of Administrative Hearings, a separate body with independent administrative law judges who handle disciplinary matters for most government agencies in the state, WIAA argued.

CDI’s proposal would allow the insurance commissioner to choose which cases would be kept in-house and which would be heard by OAH.

WIAA’s arguments include:

It’s inappropriate for CDI judges to issue rulings best made by independent judges because these decisions can affect the ability of a licensee to earn a living;

The department’s request for attorney fees and costs – which could include expenses for investigations, court costs and fees for witnesses – raises due-process issues in terms of affordability for producers if they lose, and would likely intimidate agents and brokers and prevent them from pursuing their rights to a hearing.

The department’s hearing bureau, which would adjudicate the cases the commissioner decides not to farm out to the OAH, was established following Proposition 103 to rule on rate cases. Because these cases are highly complex and involve actuarial and other technical data, the bureau’s judges have special training.

“This proposal would make the department the judge and jury as well as investigator and prosecutor,” WIAA Chairman Marty Fox said in a statement. “In addition, the CDI wants the ability to force agents found guilty to pay the department’s attorney fees and costs, which in many cases would be unaffordable. So far, WIAA is the only organization to formally oppose the proposal. We hope all the producer associations will quickly come together and present a unified and strong opposition before this becomes a bill, which would be costly to fight in the Legislature.”

WIAA is a trade association representing more than 20,000 insurance professionals in California, Nevada, Arizona and New Mexico.